Vodafone Idea Reports ₹6,432 Crore Q1 Loss Amid 4G Growth

13 Aug 2024 , 04:02 PM

Vodafone Idea reported a consolidated net loss of ₹6,432 Crore for the first quarter of FY 2024-2025, driven by 4G subscriber growth. The reported net loss shows an improvement compared to the ₹7,840 Crore loss in the same quarter of the previous year.

Revenue from operations decreased by 1.3% to ₹10,508.3 Crore, down from ₹10,655.5 Crore in the June quarter of the previous year. Average Revenue Per User (ARPU) increased by 4.5% year-over-year to ₹146, up from ₹139, due to changes in entry-level plans and subscriber upgrades.

The company’s 4G subscriber base continued its growth for the twelfth consecutive quarter, rising to 126.7 million from 122.9 million in the previous quarter.

The total subscriber base for Vodafone Idea stood at 210.1 million at the end of the first quarter. Quarterly EBITDA (pre-Ind AS 116) increased by 4.2% year-over-year, reaching ₹2,100 Crore.

Vodafone Idea highlighted its strategy of supporting entry-level users while gradually increasing prices for higher usage plans, keeping changes in entry-level plans minimal. The company expanded its international roaming services from 98 to 120 countries over the last year, emphasizing international roaming as a key focus area.

CEO Akshaya Moondra stated that after a recent equity raise, the company is working on expanding its 4G coverage and capacity and preparing for the launch of 5G services.

Some capital expenditure (capex) has already been ordered and is under execution, with a projected 15% increase in data capacity and a 16 million increase in 4G population coverage by the end of September 2024.

The current capex needs are being funded through equity, with Vodafone Idea in discussions with lenders to secure additional debt funding. The planned network expansion will require a capex of ₹50,000 Crore to ₹55,000 Crore over the next three years.

The recent tariff adjustments are seen as positive for the industry, improving cash generation and supporting significant investment needs, though further tariff rationalization is considered necessary.

In 2024, Vodafone Idea raised ₹240 billion in equity funding, including ₹180 billion through an FPO in April, ₹20.8 billion via a preferential issuance to an ABG promoter entity in May, ₹24.6 billion via preferential issuance to Nokia and Ericsson in July, and ₹16 billion through the conversion of Optionally Convertible Debentures (OCDs) between March and July.

This equity fundraise is intended to support the capex rollout for building a high-quality 4G and 5G network, contributing to India’s digital transformation.

Following these issuances, the promoters’ shareholding stands at 37.2%, and the Government of India holds a 23.1% stake in the company. As of June 30, 2024, Vodafone Idea’s total debt from banks and financial institutions was ₹46.5 billion, with an additional ₹1.6 billion in OCDs.

The company reduced its debt from banks and financial institutions by ₹45.5 billion over the past year, down from ₹92 billion in Q1FY24. The company’s cash and bank balance was ₹181.5 billion as of June 30, 2024.

Payment obligations to the government stood at ₹2,095.2 billion, which includes deferred spectrum payment obligations of ₹1,392 billion and AGR liability of ₹703.2 billion.